Will Horizon changes that held up budget have much impact?

In the end, the changes at Horizon Blue Cross Blue Shield enacted as part of the budget bargain were less sweeping than Gov. Chris Christie or the Senate hoped – and came at the cost of a three-day partial government shutdown that roiled and spoiled the Independence Day holiday weekend.

The bill doesn’t allow the state to sweep millions from Horizon’s reserves into state coffers for public health programs such as expanding opioid treatment, as Christie sought in February. It would instead remain at the company, but would have to be used to keep a lid on future premium increases.

The concept of ‘excess reserves’ was defined in a way that means the company is nowhere close to having an excess now. The allowable level – a ‘risk-based capital’ (RBC) reserve of 725 percent – has been approached twice in the last 10 years but not exceeded since years before that, Sen. Joseph Vitale said.

Christie said it’s important that there’s a cap at all, for the first time, and that the new law’s accountability and governance reforms are also important.

“I’m satisfied with the cap. If I were dictator, would I have made it lower? Yes. But I’m not,” Christie said. “But remember, a few days ago, people were saying there would be no cap at all because there would be no bill at all. Now we have a cap.”

Vitale, D-Middlesex, the bill’s sponsor, said Horizon’s RBC was 618 percent last year, and is currently below 600 percent. The Blue Cross Blue Shield Association – and now state law – requires it to remain above 550 percent.

Vitale wanted the cap at 700 percent, which he says the company has exceeded, though just barely, twice in the last 10 years. Years before that, the RBC had reached the high 700s, Vitale said. Horizon sought 750 percent, and the sides split the difference.

“If there’s any significant excess in some year, we would hope that it would be used to reduce or mitigate any future premium increase – certainly not eliminate, but maybe have an effect on lowering that number,” Vitale said.

The law signed early Tuesday morning by Christie also doesn’t have other provisions that had been in the initial version passed by the Senate, such as including a reference to Horizon’s charitable mission or defining it as the insurer of last resort.

Changes to Horizon’s board were scaled back, as well. The original bill would have converted three of the company’s 11 appointees into ones elected by members. Instead, the board would expand by two members, selected by the Senate president and Assembly, while the company keeps 11 seats.

The governor, with the consent of the Senate, still appoints four members to the Horizon board.

Horizon’s chief executive officer Bob Marino spent much of Monday in the capital meeting with lawmakers to resolve disagreements over changes to Horizon. Christie insisted on changes as a condition of allowing Democrats to add $350 million in spending to the budget.

Christie said Marino didn’t return a call he placed to them in February, the only time that’s happened with any company in his time as governor. Vitale said the agreement could have been reached a week ago but that the company was reluctant to meet.

The company instead launched a lobbying and public-relations offensive and stayed in close contact with Assembly Speaker Vincent Prieto, D-Hudson, who refused to allow a vote on the original Horizon plan – to the point that a budget vote that began Friday around 7:20 p.m. didn’t end until early Tuesday morning, just after midnight.

“Horizon is going to give it their seal of approval that, for me, gives me the comfort level that that makes it a good public policy bill,” Prieto said.

“It’s kind of stunning to me that Democrats don’t want to reform an insurance company. It’s counterintuitive. I always thought it was Republicans who were standing up for corporations and Democrats who were demonizing them,” Christie said. “Yet on this one, I’m willing to go after an insurance company, and you had a Democrat in the speaker who was standing up for them as if they were a representative of some religion.”

“They’re not Mother Teresa,” said Senate President Stephen Sweeney, D-Gloucester. “They’re trying to come off as Mother Teresa, but Horizon is an insurance company like every other insurance company that dictates policy and a lot of times doesn’t provide the best medical decisions at the end of the day.”

In a statement, Marino thanked legislative supporters, in particular Prieto, and said the company was proud to have played role in breaking the budget impasse.

“The compromise reached today with Speaker Prieto's and Senate President Sweeney's leadership achieves a goal we established when the governor first introduced the idea of taking our reserves: Horizon could only agree to legislation that is reasonable, avoids higher costs for our members, and that does not impose unfair or excessive obligations,” Marino said.

Christie said a new annual disclosure report required that will detail things such as the compensation of the 15 to 20 top Horizon executives means “no more operating in the shadows.” And he said that even if the reserve doesn’t exceed the new cap, the law means it will never get there.

“This is not a perfect bill,” Christie said. “And I didn’t come out here and say it was a perfect bill, and it was not everything that I wanted.”